Guaranty Agreement - ClimaChem Inc. and CIT Group/Equipment Financing Inc.
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guaranty"), dated as of November 21, 1997, is
made by CLIMACHEM, INC., an Oklahoma corporation ("Guarantor"), in favor of CIT
GROUP/EQUIPMENT FINANCING, INC., a New York corporation ("CIT").
A. Guarantor hereby requests CIT to enter into an amendment of the loans
owing by DSN Corporation ("Debtor") to CIT and the termination of the existing
guaranty of LSB Industries, Inc.
B. It is in the direct interest of, and benefit to, Guarantor, because
of the intercorporate or business relations between Guarantor and Debtor, to
guarantee the payment and performance of all of Debtor's Obligations (as defined
below) to CIT, and Guarantor will derive substantial economic benefits from the
relationship between CIT and Debtor.
C. CIT's willingness to make the loan modifications and terminate LSB's
guaranty is conditional upon, among other things, Guarantor's execution and
delivery of this Guaranty to CIT.
In consideration of the foregoing facts and for other valuable
consideration, Guarantor hereby agrees as follows:
1. Guaranty.
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1.1 Guarantor, hereby unconditionally and irrevocably guarantees to
CIT and its successor, transferees and assigns (a) the prompt and complete
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and indebtedness of Debtor to CIT ("Obligations"), now
existing or hereafter incurred, arising out of or in connection with any loan
agreements, promissory notes or other documents or agreements between Debtor and
CIT, and (b) the due and punctual performance and observance, strictly in
accordance with the terms of any such loan agreements or promissory notes by
Debtor, of each of the material terms, conditions, covenants agreements and
indemnities of Debtor thereunder, and if for any reason whatsoever Debtor shall
fail to do so, Guarantor shall promptly perform and observe the same. Guarantor
further agrees to pay any and all out-of-pocket costs and expenses, including
reasonable attorney's fees, which may be paid or incurred by CIT in collecting
from Debtor or Guarantor any or all of the Obligations and/or in enforcing any
rights hereunder.
1.2 The obligations of Guarantor under this Guaranty shall be
continuing, absolute and unconditional under any and all circumstances and shall
be paid or performed by Guarantor regardless of (a) the validity, legality or
enforceability of any loan agreement or promissory note by Debtor in favor of
CIT, any of the Obligations or any collateral security or other guaranty
therefor at any time or from time to time held by CIT; (b) any
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defense, offset or counterclaim which may at time be available to, or asserted
by, Debtor or Guarantor against CIT; or (c) any other event or circumstance
which may constitute, or might be construed to constitute, an equitable or legal
discharge or a surety or a guarantor, it being the purpose and intent of
Guarantor that this Guaranty and Guarantor's obligations hereunder shall remain
in full force and effect and be binding upon Guarantor and its successors until
the Obligations and any obligations of Guarantor under this Guaranty shall have
been satisfied by final payment in full.
1.3 Guarantor hereby consents, without the necessity of any
reservation of rights against Guarantor and without notices to or assent by
Guarantor that (a) any demand for payment of any of the Obligations made by CIT
may be rescinded by CIT and any of the Obligations continued; (b) the
Obligations, or the liability of any party upon or for any part thereof, or any
collateral security documents or guaranty therefor, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated, settled,
compromised, subordinated, waived, surrendered or released by CIT; (c) any loan
agreement or any promissory note by Debtor in favor of CIT, any collateral,
security documents or other guaranties or documents in connection therewith may
be amended, modified, supplemented or terminated, in whole or in part, as CIT
may deem advisable from time to time; and (d) any collateral securing the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released, Guarantor remaining bound hereunder notwithstanding the occurrence of
any of the foregoing. CIT shall not have any duty to protect, secure, perfect or
insure any collateral securing the payment of the Obligations. This is a
guaranty of payment and performance, and not merely of collection. Guarantor
waives any requirement that CIT make any demand, commence suit or exercise any
other right or remedy under any loan agreement by Debtor in favor of CIT prior
to enforcing its rights against Guarantor hereunder. Guarantor waives diligence,
presentment, protest, demand for payment and/or notice of default or non-payment
to or upon Debtor or Guarantor with respect to the Obligations. Guarantor waives
any right to require CIT to marshall assets in favor of Debtor, Guarantor or any
other person. When making any demand hereunder against Guarantor, CIT may, but
shall be under no obligation to, make a similar demand on any other guarantor,
and any failure by CIT to make any such demand or to collect any payments from
any such other guarantor or any release of such other guarantor shall not
relieve Guarantor of its obligations and liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of CIT against Guarantor. For the purpose hereof "demand" shall include the
commencement and continuance of any legal proceedings.
1.4 Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by CIT upon this Guaranty or
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acceptance of this Guaranty. The amendments and modifications to the Debtor's
loan documents and the termination of the LSB Industries' Guaranty shall
conclusively be deemed to have been contracted for or incurred in reliance upon
this Guaranty, and all dealings among Debtor and Guarantor and CIT shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guaranty.
1.5 Guarantor hereby waives any duty on the part of CIT (should any
such duty exist) to disclose to Guarantor any matter, fact or thing related to
the business, operations or condition (financial or otherwise) of Debtor or its
affiliates or subsidiaries or their properties, whether now or hereafter known
by CIT.
1.6 This Guaranty shall continue to be effective, or be reinstated,
as the case may be, if at any time, payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by CIT upon
the insolvency, bankruptcy or reorganization or Debtor; or otherwise, all as
though such payment had not been made.
2. No Subrogation. Guarantor expressly waives any and all rights of
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subrogation, reimbursement, indemnity, exoneration, contribution and any other
claim which it may now or hereafter have against Debtor or any other person
directly or contingently liable for the Obligations, or against or with respect
to Debtor's property (including, without limitation, the collateral), arising
from the existence or performance of this Guaranty.
3. Representations and Warranties. Guarantor hereby represents and
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warrants that, as of the date of this Guaranty (unless the context otherwise
provides), (a) Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the State of its incorporation set forth in
the introductory paragraph hereof; (b) Guarantor has full power, authority and
legal rights to execute, deliver and perform this Guaranty and Guarantor has
taken all necessary corporate action to authorize such execution, delivery and
performance; (c) this Guaranty has been duly authorized, executed and delivered
by Guarantor and constitutes a legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms; (d) no consent of any person, and no
consent, license, approval or authorization of, or registration or filing with,
any governmental authority, bureau or agency is required in connection with the
execution, delivery, performance and payment under, this Guaranty; (e) the
execution, delivery, performance and payment of this Guaranty does not and will
not contravene any applicable law, regulation, order or decree, the certificate
of incorporation or by-laws of Guarantor or any provisions of any indenture,
mortgage, or other material contract agreement to which Guarantor, is a party or
by which any
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of the same or any of their respective assets may be bound; (f) there is no
action, suit, investigation or proceeding by or before any court, arbitrator,
administrative agency or other governmental authority pending or threatened
against or affecting Guarantor; (g) all financial information of Guarantor
heretofore furnished CIT is true and correct; and (h) Guarantor is not in
default under any indenture, mortgage, contract or other agreement to which it
is a party or by which Guarantor or any of its assets may be bound, except for
any such default which would not materially affect Guarantor's ability to
perform its obligations under this Guaranty or any such indenture, mortgage,
contract or other agreement.
4. No Changes in Guarantor. Guarantor covenants and agrees that from and
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after the date hereof and so long as any of the Obligations remain outstanding,
it will not (a) enter into any transaction of merger unless it is the surviving
corporation and after giving effect to such merger or consolidation its tangible
net worth equals or exceeds that which existed prior to such merger or
consolidation; (b) liquidate or dissolve, or (c) sell or otherwise dispose of
all or any substantial part of its assets.
5. Additional Covenants of Guarantor. Guarantor covenants and agrees that
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from and after the date hereof and so long as any of the Obligations remain
outstanding, it will: (a) promptly give written notice to CIT of the occurrence
of any default or event of default hereunder; (b) promptly provide CIT with
copies of all SEC filings affecting Guarantor; (c) (i) duly observe and conform
to all requirements of any governmental authorities relating to the conduct of
its business or to its properties or assets, (ii) maintain its existence as a
legal entity and obtain and keep in full force and effect all material rights,
licenses and permits which are necessary to the proper conduct of its business,
and (iii) obtain or cause to be obtained as promptly as possible any
governmental, administrative or agency approval and make any filing or
registration therewith which at the time shall be required with respect to the
performance of its obligations under this Guaranty; (d) permit CIT or its
authorized representative at any reasonable time or times following the
occurrence and during the continuation of an event of default hereunder to
inspect its books and records; (e) keep proper books of record and account in
which in which full, true and correct entries in accordance with generally
accepted accounting principles will be made of all dealings or transactions in
relation to its business and activities; and (f) furnish to CIT all financial
statements required under the loan documents between Debtor and CIT, including
the Amendment referenced above.
6. Notices. All notices, requests and demands to or upon Guarantor or CIT
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shall be deemed duly given or made when sent, if given by telecopier, when
delivered, if given by personal delivery or overnight commercial carrier, or the
third calendar day after
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deposit in the United States mail, certified mail, return receipt requested, and
addressed.
if to Guarantor: CLIMACHEM, INC.
16 South Pennsylvania
Oklahoma City, Oklahoma 73101
ATTENTION: President
Telecopier No. (405) 235-5067
with a copy to: David Shear, Esquire
Legal Department
LSB Industries, Inc.
16 South Pennsylvania
Oklahoma City, Oklahoma 73101
if to CIT: The CIT Group/Equipment Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
ATTENTION: Senior Vice President - Credit
Telecopier No. (973) 740-5005
or in either case, to such other address or telecopier number as may be
hereafter designated in writing by either of them to the other.
7. No Waiver; Cumulative Remedies. A waiver by CIT of any right or remedy
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hereunder on any one occasion shall not be construed as a bar to any right or
remedy which CIT would otherwise have had on any future occasion. No failure to
exercise nor any delay in exercising on the part of CIT any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.
8. Miscellaneous.
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8.1 None of the terms or provisions of this Guaranty may be amended,
waived, altered, modified or terminated except by an instrument in writing
signed by the party against which enforcement of such amendment, waiver,
alteration, modification or termination is sought. This writing contains the
complete, final and exclusive statement of the terms of the agreement between
Guarantor and CIT relating to this guaranty. No course of prior dealings between
the parties, no usage of the trade, and no parol or extrinsic evidence of any
nature, shall be used or be relevant to supplement or explain or modify any term
used in this Guaranty.
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This Guaranty and all obligations of Guarantor hereunder shall be binding upon
the successors and assigns of Guarantor, and shall, together with the rights and
remedies of CIT hereunder, insure to the benefit of CIT and its successors and
assigns. The invalidity, illegality or unenforceability or any provision of this
Guaranty shall not affect the validity, legality or enforceability of any other
provision of this Guaranty.
8.2 GUARANTOR AND CIT ACKNOWLEDGE THAT JURY TRIALS OFTEN ENTAIL
ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED BY NONJURY TRIALS. GUARANTOR AND
CIT AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE HAD BEFORE A STATE OR FEDERAL
JUDGE BY MEANS OF A BENCH TRIAL WITHOUT A JURY. IN VIEW OF THE FOREGOING, AND AS
A SPECIFICALLY NEGOTIATED PROVISION OF THIS GUARANTY, GUARANTOR AND CIT HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OR ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION ARISING UNDER THIS GUARANTY, OR THE TRANSACTIONS RELATED HERETO,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND GUARANTOR AND CIT HEREBY AGREE AND CONSENT THAT GUARANTOR
OR CIT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAVIER OF THEIR
RIGHT TO TRIAL BY JURY.
8.3 THIS GUARANTY SHALL BE GOVERNED BY, AND BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
8.4 GUARANTOR HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN ANY WAY IN CONNECTION WITH THIS
GUARANTY MAY BE INSTITUTED OR BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, IN
THE COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURTS FOR THE SOUTHERN
DISTRICT OF NEW YORK, AS CIT MAY ELECT, AND BY EXECUTION AND DELIVERY OF THIS
GUARANTY, GUARANTOR HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY SUCH COURT, AND TO ALL PROCEEDINGS IN SUCH COURTS. GUARANTOR
IRREVOCABLY CONSENTS TO SERVICE OF ANY SUMMONS AND/OR LEGAL PROCESS BY
REGISTERED OR CERTIFIED UNITED STATES AIR MAIL, POSTAGE PREPAID, TO GUARANTOR AT
THE ADDRESS SET FORTH IN SECTION 6 HEREOF, SUCH METHOD OF SERVICE TO CONSTITUTE,
IN EVERY RESPECT, SUFFICIENT AND EFFECTIVE SERVICE OF PROCESS IN ANY SUCH LEGAL
ACTION OR PROCEEDING. NOTHING IN THIS GUARANTY SHALL AFFECT THE RIGHT TO SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF CIT TO
BRING ACTIONS, SUITS OR PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION.
GUARANTOR FURTHER AGREES THAT FINAL JUDGMENT AGAINST IT IN ANY SUCH LEGAL
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION, WITHIN OR OUTSIDE THE UNITED STATES OF AMERICA, BY SUIT ON THE
JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH
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SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF THE LIABILITY.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
Guarantor:
CLIMACHEM, INC.
By:_______________________________
Title:____________________________
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